Beebe Trademark Law: An Open-Source Casebook II. Trademark Infringement 3

1. The History of the Confusion-Based Cause of Action for Trademark Infringement

a. The Early-Twentieth Century Approach to the Likelihood of Consumer Confusion

Borden Ice Cream Co. v. Borden’s Condensed Milk Co.

[1] This is an appeal from an interlocutory order of injunction entered in the District Court, restraining the appellants ‘from the use of the name 'Borden’ in the manufacture or sale of ice cream and like articles, and the manufacture or sale of milk products in any of their forms, without plainly and in written or printed form attached to all cartons of such commodities, and upon all wagons or other vehicles used in the delivery of such commodities, and on all letter heads and other stationery going out to customers and to the public, and in all places where the name 'Borden's Ice Cream Company' may hereafter appear in the transaction of any business by the defendants, advising purchasers and the public in an unmistakable manner that the product of the defendants is not that of the complainant, 'Borden's Condensed Milk Company.'‘

[2] The word ‘Borden‘ in the corporate name of the appellee was taken from the name of Gail Borden, who founded the business in the year 1857, and since that time it has been and is now a trade-name of great value, identified almost universally with the business of milk and milk products of the appellee and its predecessors. The trade-name ‘Borden,‘ or the word ‘Borden,‘ constitutes one of the principal assets of the appellee, and is widely known and identified with the good will and public favor enjoyed by it throughout the United States.

[3] On May 31, 1899, the appellee was incorporated under the laws of the state of New Jersey, with broad corporate powers, and specifically authorized ‘to manufacture, sell and otherwise deal in condensed, preserved and evaporated milk and all other manufactured forms of milk; to produce, purchase and sell fresh milk, and all products of milk; to manufacture, purchase and sell all food products; to raise, purchase and sell all garden, farm and dairy products; to raise, purchase and sell, and otherwise deal in, cattle and all other live stock; to manufacture, lease, purchase and sell all machinery, tools, implements, apparatus and all other articles and appliances used in connection with all or any of the purposes aforesaid, or with selling and transporting the manufactured or other products of the company; and to do any and all things connected with or incidental to the carrying on of such business, or any branch or part thereof.‘

[4] It may be stated in this connection that the charter of the company contains no express authority to manufacture or sell what is known commercially as ice cream.

[5] The record shows that the appellee uses in the disposition of its products some thirty-two brands, each one of which either contains the name ‘Borden,‘ or is used in connection with the name ‘Borden's Condensed Milk Company.‘ Of these brands sixteen specifically refer to condensed or evaporated milk, seven to candy, two to malted milk, one to coffee, one to butter, one to buttermilk, one to fluid milk, two to cream, and one to malted milk ice cream; and that trade-marks have been registered on most of the brands.

[6] Appellee has developed in the state of Illinois and the city of Chicago, and elsewhere, a large business in the sale of fresh milk and cream and evaporated milk to confectioners for use by them in making commercial ice cream. It has expended large sums of money in promoting and advertising its business, and particularly in extending the sale of the so-called ‘Borden's Peerless Brand Evaporated Milk, Confectioners' Size,‘ a high quality of evaporated milk inclosed [sic] in cans, especially designed for use in the manufacture of ice cream.

[7] For more than two years prior to the filing of the bill in the District Court, the appellee had been manufacturing a form of ice cream known as ‘Borden's Malted Milk Ice Cream,‘ which product is, as the name implies, an ice cream made with malted milk as its basic element, and is especially adapted for use in hospitals. This malted milk ice cream, which hitherto has been used only in hospitals, the appellee is about to place on the market for general use in competition with commercial ice cream.

[8] On May 25, 1911, the appellants Charles F. Borden, George W. Brown, and Edgar V. Stanley applied to the Secretary of State of the state of Illinois for a license to incorporate under the name of ‘Borden Ice Cream Company.‘ On July 31, 1911, the appellee notified the individual appellants that the term ‘Borden‘ had become so firmly established in connection with the products of the appellee the use of that word in connection with any company dealing in milk products would lead to the presumption that they were the products of the appellee, and demanded that the word ‘Borden‘ be eliminated from appellants' company name.

[9] On the same day appellee protested to the Secretary of State of the state of Illinois against the issuance of any charter under the name of ‘Borden Ice Cream Company,‘ but on the 16th of August, 1911, a charter was duly issued to the ‘Borden Ice Cream Company,‘ by which it was authorized ‘to manufacture and sell ice cream, ices and similar products.‘

[10] The appellant Charles F. Borden had never before been engaged in the ice cream business, or in buying or selling milk or milk products, or in any similar business, and is not the principal person connected with the appellant Borden Ice Cream Company. The appellant Lawler is an ice cream manufacturer, and has subscribed to 47 out of a total of 50 shares of stock of the Borden Ice Cream Company. Charles F. Borden has subscribed to one share of stock, and has not paid for that.

[11] The bill charges, upon information and belief, that it is the intention of appellant Borden Ice Cream Company to use the word ‘Borden‘ for the purpose of trading upon the reputation of appellee's goods and products, and for the purpose of deceiving and defrauding the public into the belief that such product is the product of the appellee; that such ‘improper, deceitful and fraudulent use of the name 'Borden’ will be a great and irreparable injury to the complainant's (appellee's) property right in its trade-name; and that the reputation of the products of complainant (appellee) will be greatly injured thereby; and that the business of complainant (appellee) will be injured;‘ and that there will be great confusion in the business carried on by the original company because of such improper use; and that it will be impossible for present and prospective customers to know that the product of the Borden Ice Cream Company is not the product of Borden's Condensed Milk Company.

[12] The bill and the affidavits on file do not show any facts tending to sustain the allegation of irreparable injury to the old company or its business, or showing or tending to show that the old company has been or will be injured in any way in the business which it is now engaged in. Moreover, it does not appear that the malted milk ice cream manufactured by the old company will in any way come into competition with the commercial ice cream proposed to be put on the market by the new company.

[13] The bill was filed before the defendant had started to do any business. The answer admits most of the material allegations, but denies all fraudulent purpose.

CARPENTER, District Judge (after stating the facts as above).

[14] A personal name, such as ‘Borden,‘ is not susceptible of exclusive appropriation, and even its registration in the Patent Office cannot make it a valid trade-mark. Howe Scale Co. v. Wyckoff, 198 U.S. 134,; Elgin Natl. Watch Co. v. Illinois Watch Case Co., 179 U.S. 665; Singer Mfg. Co. v. June Mfg. Co., 163 U.S. 169; Brown Chemical Co. v. Meyer, 139 U.S. 540.

[15] There is no charge made in the bill that the appellants are infringing, or propose to infringe, upon any technical trade-mark of the appellee, so we may dismiss any claim for relief upon that score.

[16] The only theory upon which the injunction in this case can be sustained is upon that known as unfair competition. Relief against unfair competition is granted solely upon the ground that one who has built up a good will and reputation for his goods or business is entitled to all of the resultant benefits. Good will or business popularity is property, and, like other property, will be protected against fraudulent invasion.

[17] The question to be determined in every case of unfair competition is whether or not, as a matter of fact, the name used by the defendant had come previously to indicate and designate the complainant's goods. Or, to put it in another way, whether the defendant, as a matter of fact, is, by his conduct, passing off his goods as the complainant's goods, or his business as the complainant's business.

[18] It has been said that the universal test question in cases of this class is whether the public is likely to be deceived as to the maker or seller of the goods. This, in our opinion, is not the fundamental question. The deception of the public naturally tends to injure the proprietor of a business by diverting his customers and depriving him of sales which otherwise he might have made. This, rather than the protection of the public against imposition, is the sound and true basis for the private remedy. That the public is deceived may be evidence of the fact that the original proprietor's rights are being invaded. If, however, the rights of the original proprietor are in no wise interfered with, the deception of the public is no concern of a court of chancery. American Washboard Co. v. Saginaw Mfg. Co., 103 Fed. 281.

[19] Doubtless it is morally wrong for a person to proclaim, or even intimate, that his goods are manufactured by some other and well-known concern; but this does not give rise to a private right of action, unless the property rights of that concern are interfered with. The use by the new company of the name ‘Borden‘ may have been with fraudulent intent; and, even assuming that it was, the trial court had no right to interfere, unless the property rights of the old company were jeopardized. Nothing else being shown, a court of equity cannot punish an unorthodox or immoral, or even dishonest, trader; it cannot enforce as such the police power of the state.

[20] In the case now under our consideration the old company (the appellee) never has manufactured what is known as commercial ice cream. The new company (the appellant) was incorporated for the sole purpose of manufacturing and putting on the market such an article.

[21] Nonexclusive trade-names are public property in their primary sense, but they may in their secondary sense come to be understood as indicating the goods or business of a particular trader. Such trade-names are acquired by adoption and user, and belong to the one who first used them and gave them value in a specific line of business. It is true that the name of a person may become so associated with his goods or business that another person of the same or a similar name engaging in the same business will not be allowed to use even his own name, without affirmatively distinguishing his goods or business.

[22] The secondary meaning of a name, however, has no legal significance, unless the two persons make or deal in the same kind of goods. Clearly the appellants here could make gloves, or plows, or cutlery, under the name ‘Borden‘ without infringing upon any property right of the old company. If that is true, they can make anything under the name ‘Borden‘ which the appellee has not already made and offered to the public. George v. Smith (C.C.) 52 Fed. 830.

[23] The name ‘Borden,‘ until appellants came into the field, never had been associated with commercial ice cream. By making commercial ice cream the appellants do not come into competition with the appellee. In the absence of competition, the old company cannot assert the rights accruing from what has been designated as the secondary meaning of the word ‘Borden.‘ The phrase ‘unfair competition‘ presupposes competition of some sort. In the absence of competition the doctrine cannot be invoked.

[24] There being no competition between the appellants and appellee, we are confronted with the proposition that the appellee, in order to succeed on this appeal, has and can enforce a proprietary right to the name ‘Borden‘ in any kind of business, to the exclusion of all the world.

[25] It is urged that appellee has power, under its charter, to make commercial ice cream, and that it intends some day to do so. If such intention can be protected at this time, it might well be that appellee, having enjoined appellants from making commercial ice cream, would rest content with selling its evaporated milk to ice cream dealers, and never itself manufacture the finished product. But, as was well stated by Judge Coxe, in George v. Smith, supra:

‘It is the party who uses it first as a brand for his goods, and builds up a business under it, who is entitled to protection, and not the one who first thought of using it on similar goods, but did not use it. The law deals with acts and not intentions.‘

[26] Appellee also urges that it makes and sells large quantities of evaporated or condensed milk to manufacturers of ice cream, and that if the appellants are permitted to use the name ‘Borden‘ in the ice cream business dealers probably will believe that its ice cream is made by appellee, and will in consequence buy the finished product rather than the component parts, and that appellee's sales of evaporated or condensed milk will fall off, to its manifest damage. Such result would be too speculative and remote to form the basis of an order restraining men from using in their business any personal name, especially their own.

[27] Appellee is in this position: If it bases its right to an injunction upon the doctrine of unfair competition, no competition of any kind has been shown by the record. If it relies upon some supposed damage which may result from appellants' use of the name ‘Borden‘ in connection with inferior goods, the action is premature, because the appellants, as yet, have neither sold nor made anything.

[28] The order of the District Court must be reversed; and it is so ordered.

b. The Development of the Modern Multifactor Test

In determining whether the actor's designation is confusingly similar to the other's trade-mark or trade name, the following factors are important:

(a) the degree of similarity between the designation and the trade-mark or trade name in

(i) appearance;

(ii) pronunciation of the words used;

(iii) verbal translation of the pictures or designs involved;

(iv) suggestion;

(b) the intent of the actor in adopting the designation;

(c) the relation in use and manner of marketing between the goods or services marketed by the actor and those marketed by the other;

(d) the degree of care likely to be exercised by purchasers.

In determining whether one's interest in a trade-mark or trade name is protected, under the rules stated in § § 717 and 730, with reference to the goods, services or business in connection with which the actor uses his designation, the following factors are important:

(a) the likelihood that the actor's goods, services or business will be mistaken for those of the other;

(b) the likelihood that the other may expand his business so as to compete with the actor;

(c) the extent to which the goods or services of the actor and those of the other have common purchasers or users;

(d) the extent to which the goods or services of the actor and those of the other are marketed through the same channels;

(e) the relation between the functions of the goods or services of the actor and those of the other;

(f) the degree of distinctiveness of the trademark or trade name;

(g) the degree of attention usually given to trade symbols in the purchase of goods or services of the actor and those of the other;

(h) the length of time during which the actor has used the designation;

(i) the intent of the actor in adopting and using the designation.

Id. at § 731.

Through the course of the mid-twentieth century, the federal courts lost track of the distinction between the two sets of factors, and the circuits each began to use a single, unified multifactor test regardless of whether the parties’ goods were competitive or not. Each circuit developed its own test, and for the most part, the peculiarities of the particular cases in which the circuit’s multifactor test first coalesced determined which factors are still considered in that circuit today. A good example of this is found in the following opinion, Polaroid Corp. v. Polarad Electronics Corp., 287 F.2d 402 (2d Cir. 1961), which is the origin of the Second Circuit’s “Polaroid Factors.” Despite Judge Friendly’s clear statement that his test was meant for situations “[w]here the products are different,” id. at 495, Second Circuit courts routinely apply the Polaroid factors in competing goods cases. The opinion is presented here primarily for its historical significance as one of the most influential opinions in U.S. trademark law, but also to show, in the final paragraph of the opinion excerpt, how much trademark infringement doctrine had evolved since Borden’s Ice Cream.

Polaroid Corp. v. Polarad Electronics Corp.

287 F.2d 492 (2d Cir. 1961)

FRIENDLY, Circuit Judge.

[1] Plaintiff, Polaroid Corporation, a Delaware corporation, owner of the trademark Polaroid and holder of 22 United States registrations thereof granted between 1936 and 1956 and of a New York registration granted in 1950, brought this action in the Eastern District of New York, alleging that defendant's use of the name Polarad as a trademark and as part of defendant's corporate title infringed plaintiff's Federal and state trademarks and constituted unfair competition. It sought a broad injunction and an accounting. Defendant's answer, in addition to denying the allegations of the complaint, sought a declaratory judgment establishing defendant's right to use Polarad in the business in which defendant was engaged, an injunction against plaintiff's use of Polaroid in the television and electronics fields, and other relief. Judge Rayfiel, in an opinion reported in D.C.1960, 182 F.Supp. 350, dismissed both the claim and the counterclaims, concluding that neither plaintiff nor defendant had made an adequate showing with respect to confusion and that both had been guilty of laches. Both parties appealed but defendant has withdrawn its cross-appeal. We find it unnecessary to pass upon Judge Rayfiel's conclusion that defendant's use of Polarad does not violate any of plaintiff's rights. For we agree that plaintiff's delay in proceeding against defendant bars plaintiff from relief so long as defendant's use of Polarad remains as far removed from plaintiff's primary fields of activity as it has been and still is.

[2] The name Polaroid was first adopted by plaintiff's predecessor in 1935. It has been held to be a valid trademark as a coined or invented symbol and not to have lost its right to protection by becoming generic or descriptive, Marks v. Polaroid Corp., D.C.D.Mass.1955, 129 F.Supp. 243. Polaroid had become a well known name as applied to sheet polarizing material and products made therefrom, as well as to optical desk lamps, stereoscopic viewers, etc., long before defendant was organized in 1944. During World War II, plaintiff's business greatly expanded, from $1,032,000 of gross sales in 1941 to $16,752,000 in 1945, due in large part to government contracts. Included in this government business were three sorts on which plaintiff particularly relies, the sale of Schmidt corrector plates, an optical lens used in television; research and development contracts for guided missiles and a machine gun trainer, both involving the application of electronics; and other research and development contracts for what plaintiff characterizes as ‘electro-optical devices employing electronic circuitry in combination with optical apparatus.’ In 1947 and 1948 plaintiff's sales declined to little more than their pre-war level; the tremendous expansion of plaintiff's business, reaching sales of $65,271,000 in 1958, came after the development of the Land camera in 1948.

[4] Conceding that the bulk of its business is in optics and photography, lines not pursued by defendant, plaintiff nevertheless claims to be entitled to protection of its distinctive mark in at least certain portions of the large field of electronics. Plaintiff relies on its sales of Schmidt corrector plates, used in certain types of television systems, first under government contracts beginning in 1943 and to industry commencing in 1945; on its sale, since 1946, of polarizing television filters, which serve the same function as the color filters that defendant supplies as a part of the television apparatus sold by it; and, particularly, on the research and development contracts with the government referred to above. Plaintiff relies also on certain instances of confusion, predominantly communications intended for defendant but directed to plaintiff. Against this, defendant asserts that its business is the sale of complex electronics equipment to a relatively few customers; that this does not compete in any significant way with plaintiff's business, the bulk of which is now in articles destined for the ultimate consumer; that plaintiff's excursions into electronics are insignificant in the light of the size of the field; that the instances of confusion are minimal; that there is no evidence that plaintiff has suffered either through loss of customers or injury to reputation, since defendant has conducted its business with high standards; and that the very nature of defendant's business, sales to experienced industrial users and the government, precludes any substantial possibility of confusion. Defendant also asserts plaintiff's laches to be a bar.

[5] The problem of determining how far a valid trademark shall be protected with respect to goods other than those to which its owner has applied it, has long been vexing and does not become easier of solution with the years. Neither of our recent decisions so heavily relied upon by the parties, Harold F. Ritchie, Inc. v. Chesebrough-Pond's, Inc., 2 Cir., 1960, 281 F.2d 755, by plaintiff, and Avon Shoe Co., Inc. v. David Crystal, Inc., 2 Cir., 1960, 279 F.2d 607 by defendant, affords much assistance, since in the Ritchie case there was confusion as to the identical product and the defendant in the Avon case had adopted its mark ‘without knowledge of the plaintiffs' prior use,’ at page 611. Where the products are different, the prior owner's chance of success is a function of many variables: the strength of his mark, the degree of similarity between the two marks, the proximity of the products, the likelihood that the prior owner will bridge the gap, actual confusion, and the reciprocal of defendant's good faith in adopting its own mark, the quality of defendant's product, and the sophistication of the buyers. Even this extensive catalogue does not exhaust the possibilities—the court may have to take still other variables into account. American Law Institute, Restatement of Torts, §§ 729, 730, 731. Here plaintiff's mark is a strong one and the similarity between the two names is great, but the evidence of actual confusion, when analyzed, is not impressive. The filter seems to be the only case where defendant has sold, but not manufactured, a product serving a function similar to any of plaintiff's, and plaintiff's sales of this item have been highly irregular, varying, e.g., from $2,300 in 1953 to $303,000 in 1955, and $48,000 in 1956.

[6] If defendant's sole business were the manufacture and sale of microwave equipment, we should have little difficulty in approving the District Court's conclusion that there was no such likelihood of confusion as to bring into play either the Lanham Act, 15 U.S.C.A. § 1114(1), or New York General Business Law, § 368-b, or to make out a case of unfair competition under New York decisional law, see Avon Shoe Co. v. David Crystal, Inc., supra, at page 614, footnote 11. What gives us some pause is defendant's heavy involvement in a phase of electronics that lies closer to plaintiff's business, namely, television. Defendant makes much of the testimony of plaintiff's executive vice president that plaintiff's normal business is ‘the interaction of light and matter.’ Yet, although television lies predominantly in the area of electronics, it begins and ends with light waves. The record tells us that certain television uses were among the factors that first stimulated Dr. Land's interest in polarization, see Marks v. Polaroid Corporation, supra, 129 F.Supp. at page 246, plaintiff has manufactured and sold at least two products for use in television systems, and defendant's second counterclaim itself asserts likelihood of confusion in the television field. We are thus by no means sure that, under the views with respect to trademark protection announced by this Court in such cases as Yale Electric Corp. v. Robertson, 2 Cir., 1928, 26 F.2d 972 (locks vs. flashlights [finding confusion]); L. E. Waterman Co. v. Gordon, 2 Cir., 1934, 72 F.2d 272 (mechanical pens and pencils vs. razor blades [finding confusion]); Triangle Publications, Inc. v. Rohrlich, 2 Cir., 1948, 167 F.2d 969, 972 (magazines vs. girdles [finding confusion]); and Admiral Corp. v. Penco, Inc., 2 Cir., 1953, 203 F.2d 517 (radios, electric ranges and refrigerators vs. sewing machines and vacuum cleaners [finding confusion]), plaintiff would not have been entitled to at least some injunctive relief if it had moved with reasonable promptness. However, we are not required to decide this since we uphold the District Court's conclusion with respect to laches.

[The court goes on to reject the plaintiff’s attempts to overcome the defendant’s defense of laches.]

Questions and Comments

1. “His Mark is His Authentic Seal.” In Yale Elec. Corp. v. Robertson, 26 F.2d 972 (2d Cir. 1928), which Judge Friendly cites in the final paragraph of Polaroid, Judge Hand set forth his oft-quoted description of the plaintiff’s interest in preventing the use of its mark on noncompeting goods:

However, it has of recent years been recognized that a merchant may have a sufficient economic interest in the use of his mark outside the field of his own exploitation to justify interposition by a court. His mark is his authentic seal; by it he vouches for the goods which bear it; it carries his name for good or ill. If another uses it, he borrows the owner's reputation, whose quality no longer lies within his own control. This is an injury, even though the borrower does not tarnish it, or divert any sales by its use; for a reputation, like a face, is the symbol of its possessor and creator, and another can use it only as a mask. And so it has come to be recognized that, unless the borrower's use is so foreign to the owner's as to insure against any identification of the two, it is unlawful.

Id. at 974. If the defendant’s conduct “does not tarnish [the plaintiff’s reputation], or divert any sales by its use,” then what exactly is the harm to the plaintiff?